Lincoln Financial Group’s 2017 Lincoln Retirement Power Participant Study showed that while most plan participants are confident and optimistic about their retirement savings, they acknowledge that they are saving less than they think they should to meet their retirement savings needs. The study shows that competing financial priorities are the culprit producing this conundrum of confidence.
In 2012, when Lincoln Financial conducted its first Retirement Power study, only 29% of respondents reported being confident and 45% said they were optimistic about their retirement savings. This year’s study found 39% of respondents saying they feel confident, and more than half (55%) feeling optimistic.
Two-thirds of retirement plan participants understand they should be saving at least 10% of their salary to stay on track, and 45% believe they need to save 15% or more. However, only four in 10 savers are putting away what they think is necessary, and, among the savers saving less, the majority (68%) would need to up their savings by 5% or more to be on track.
The more competing priorities a participant reports, the less money he contributes to his retirement plan, the survey found. Only 36% of individuals with eight or more competing priorities contribute 10% or more to their retirement plan, but of those with two or fewer priorities fighting for a share of their wallet, 59% contribute at least 10%, and 40% put 15% or more away for retirement.
Student loan debt has a major impact on retirement savings, no matter how many competing financial priorities a participant reported. Six out of 10 people with student loan debt said it is keeps them from saving more for their retirement.
“Savers today face many financial pressures, and the reality is that the majority are going to be responsible for their own retirement,” says Jamie Ohl, president, retirement plan services, Lincoln Financial Group. “As an industry, we have helped people understand the importance of saving. Now, it’s up to us to help them save more so they can achieve the retirement they envision.”